March 31, 2008
Most Read Stories, One Week (2008-3-30 21:32:14)
Here are the most read stories on the Bloomberg over the last week with selected excerpts (and my comments, if any, in italics).
As of 30-Mar-2008 at 21:32:14:
- Citigroup Fires Prime Brokerage Group Co-Heads, NYT Reports
- Wall Street Firms Cut 34,000 Jobs, Most Since 2001 Dot-Com Bust
- Buffett Shows Schwarzman Berkshire’s Free Money Beats LBO Model
- Harvard Endowment Will Be Overseen by Jane Mendillo
- Taleb Outsells Greenspan as Black Swan Gives Worst Turbulence
- Lunch Lady Suffers as Banks Prepare $2 Trillion in Lending Cuts
- Dimon `Pulled the Trigger Fast’ to Win Bear Stearns
- Citigroup Estimates Cut by Oppenheimer’s Whitney
- Bear Stearns Chairman Cayne Sells His Entire Stake
- What Wall Street’s CEOs Don’t Know Can Kill You
“Citigroup, which has cut 4,000 investment banking jobs, will probably fire 2,000 more employees by the end of March — about 10 percent of the investment bank’s workforce, the Times said.”
Lots of job anxiety apparent on the Bloomberg given these top two most-read stories.
“Even the black cars that shuttle bankers and traders home from their Manhattan offices are seeing demand for their services dwindle, and the firms may have to fire some drivers, said Battalia Winston’s Bennett. ”
The “knock-on effect.” And how often is Merrill Lynch now running their helicopters between NYC and Princeton?
“The retreat by investors from all but the safest government debt has driven up LBO financing costs. The amount of extra yield investors demand to hold speculative-grade bonds over U.S. Treasuries more than tripled to 7.97 percentage points yesterday from 2.41 percentage points at the start of June.”
From feast to famine and the search (in vain) for new financing.
“‘The Harvard portfolio is well positioned to benefit from some of the things going on in the market right now,’ Mendillo said in a telephone interview. ‘Often out of these turbulent times significant money-making opportunities do arise.’”
Another Swensen disciple?
4000-word piece… I assume this will appear in Bloomberg Markets magazine.
“The tightening is apparent to Peter Djuric, a mortgage broker in Chicago who has 28 customers waiting for approvals on loans. Applications are taking a month or more for lenders to process, compared with an average of 10 days last year, he said.”
… or an average of 10 minutes at the top. :-)
“Dimon learned the art of deal-making from his mentor, Sanford ‘Sandy’ Weill, with whom he built what is now Citigroup into the largest U.S. bank. Weill, now 75, hired Dimon in 1982 after reading a term paper he wrote as a Tufts University undergraduate analyzing Weill’s deal-making.”
Dimon ass-kissed his way into his first job? Look, anyone who can buy a dollar of assets for a quarter, and be backstopped by the Fed while doing it, is going to “pull the trigger fast.”
“The bank cut its dividend for the first time after reporting a loss of $9.83 billion, or $1.99 a share.”
I bought Citi long ago (and added to it occasionally) for its dividend and have been absolutely buried in the stock. One mean friend calls me regularly to ask, ‘How’s your Saudigroup investment going?’ And I immediately reply, ‘You mean my CITICgroup investment?’ (I assume the Chinese will end up owning the Citi, not the A-rabs.)
“Cayne sold 5.66 million shares at $10.84 apiece on March 25, according to a regulatory filing today. The value of his stake plummeted from almost $1 billion last year when the shares peaked at $171.50.”
“When extremely smart people have found extremely complicated ways to make huge sums of money, the typical Wall Street boss has seldom bothered to fully understand the matter, to challenge and question and argue.
This isn’t because Wall Street CEOs are lazy, or stupid. It’s because they are trapped. The Wall Street CEO can’t interfere with the new new thing on Wall Street because the new new thing is the profit center, and the people who create it are mobile.
Anything he does to slow them down increases the risk that his most lucrative employees will quit and join another big firm, or start their own hedge fund. He isn’t a boss in the conventional sense. He’s a hostage of his cleverest employees.”
Another widely-read piece by Michael Lewis.
March 31st, 2008 at 9:15 pm
Jane Mendillo is a Jack Meyer (Harvard) disciple, not Swensen (Yale). She worked at Harvard Management before going to Wellesley.
March 31st, 2008 at 9:25 pm
Doug: Was she a Swensen student though back in the day?
April 1st, 2008 at 1:17 am
A close relative of mine worked at MLAM (Merrill Lynch Asset Management as it was then called circa 1990 or so), which was in “Princeton”, really Plainsboro next door. They had a little circular helicopter landing pad there. But I believe that unit is now part of Blackrock?
April 1st, 2008 at 4:29 am
Mao: You may be right. I was looking at her recent work history.
April 1st, 2008 at 6:14 am
@Finn: Yes, in Plainsboro, but saying “Princeton” appeals to the snobs … that was a big campus back when I lived in the area and I often saw their helicopter in the sky as well hundreds of “black cars” shuttling people back and forth to Manhattan.
@Doug: I don’t know if Swensen teaches a course, but I thought I read somewhere that he does or did.